[Congressional Record (Bound Edition), Volume 149 (2003), Part 12]
[Extensions of Remarks]
[Pages 16823-16824]
[From the U.S. Government Publishing Office, www.gpo.gov]




                DEATH TAX REPEAL PERMANENCY ACT OF 2003

                                 ______
                                 

                               speech of

                           HON. DENNIS MOORE

                               of kansas

                    in the house of representatives

                        Wednesday, June 18, 2003

  Mr. MOORE. Mr. Speaker, I rise in opposition to H.R. 8, Permanent 
Death Tax Repeal Act and in support of the Democratic substitute.
  I have long been a supporter of providing estate tax relief to 
American families, small business owners, and farmers who have worked 
their entire lives to transfer a portion of their estates upon their 
death. I have also been an advocate, however, for ensuring that we 
transfer to our children and grandchildren a healthy economy and a 
government that maintains its commitment to Social Security and 
Medicare.
  In the last Congress, I voted to repeal the estate tax and later 
voted to override President Clinton's veto of that legislation. Again, 
in the 107th Congress, I voted to repeal the estate tax as a stand-
alone measure and later voted for President Bush's $1.35 trillion tax 
cut, which contained a provision to phase out and ultimately repeal the 
estate tax.
  When I voted for the President's tax bill last year, I did so with 
his assurance that we would have the money to pay for it without 
dipping into the Social Security surplus. Unfortunately, due to the 
recession and the war on terrorism, the budget surpluses projected last 
year did not materialize and we are now borrowing money from Social 
Security Trust Funds to pay for even our most basic needs including the 
war on terrorism.
  While I agree that we should fix provisions of last year's tax cut to 
increase certainty in the tax code that will help people plan for their 
financial future, we should also make sure that we are not borrowing 
money--particularly from the Social Security Trust Funds--to pay for 
these cuts while we are simultaneously trying to enhance our national 
security needs. We should also ensure that we aren't raising other 
taxes to pay for provisions that are, quite frankly, political in 
nature and have nothing to do with ensuring that the estate tax burden 
is reduced on our small businesses and farms.
  For example, Mr. Speaker, the underlying bill contains a hidden tax 
on all decedents. By fully repealing the estate tax, this bill would 
have the effect of repealing a provision in the code, referred to as 
the ``step up in basis,'' that protects heirs from paying capital gains 
on estates.
  Anyone who has ever sold a ``capital'' asset, such as real estate, 
stocks, bonds, mutual funds, knows that cost basis is what the gain or 
loss on the sales price is measured against. Generally speaking, cost 
basis is the purchase price of property subject to certain adjustments 
upward or downward. For example, if property was purchased in 1950 at a 
cost of $10,000 and sold in 2001 at $100,000, an individual would have 
a taxable capital gain of $90,000. The step-up basis interacts with 
estates such that when this property passes by reason of death, the 
heir inherits the asset with a new cost basis equivalent to the market 
value of the asset on the date of the benefactor's death. Taking the 
example above, if the property were transferred in 2001 at a value of 
$100,000 and the heir sold the property in 2006 for $120,000, the heir 
would only have a taxable capital gain of $20,000 instead of $110,000.
  Should this bill become law, an owner of farmland, stocks, mutual 
funds, or even a personal residence would have lost the opportunity to 
pass the asset to the next generation without passing along the owner's 
cost basis, thus reducing the future capital gains bill that will have 
to be paid when the heirs sell the asset. In short, this amounts to a 
tax increase

[[Page 16824]]

on all estates due simply to the increased cost basis of the estate.
  I believe there is a more responsible way to provide estate tax 
relief to our small business owners and farmers. The substitute will 
provide substantial and immediate relief by increasing a family's 
exclusion from $1 million to $6 million. It would also preserve the 
step-up basis provisions in current law so heirs to an estate do not 
receive a large capital gains bill as they would if Congress repealed 
the estate tax entirely. All of these changes would take place 
immediately. The Treasury Department estimates that increasing the 
estate credit to $6 million would exempt approximately 99 percent of 
all estates without the dramatic loss in revenues.
  Mr. Speaker, the substitute is also paid for. In this environment 
when our budget is in crisis, it is critically important that we do not 
continue to drown ourselves in red ink. The majority's bill would cost 
over $60 billion a year, at a time when we are running a $400 billion 
annual deficit. We simply cannot afford to borrow even more money to 
provide additional tax cuts.
  Again, I have supported previous efforts to provide estate tax relief 
because, in the past, we have been able to afford it. I am concerned, 
however, that the total costs of these bills will continue to drive our 
nation into debt, and reduce our ability to deal with the long-term 
challenges facing Social Security and Medicare. Until we deal with the 
long term financial problems facing Social Security, we need to be very 
careful about any tax or spending bills that would place a greater 
burden on the budget in the next decade, effectively transferring these 
costs and burdens to our children and grandchildren.

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